By Lauren Etter and David Kesmodel With the price of wheat and other grains soaring, a broad swath of food producers are calling on the government to help farmers ratchet up production. Some groups are calling for loosening a federal conservation program that compensates growers for leaving fields fallow. Others are even calling for restrictions on exports -- an effort unlikely to gain traction but one that illustrates the depth of food producers' concerns. So far, the government is resisting. But the growing chorus in favor of government action signals a new phase in a long-term shift in the global grain markets. For years, U.S. farmers have groused about low prices brought on by overproduction. Now, surging demand from emerging nations and the biofuels industry are raising the specter of empty storage bins. In a letter to the U.S. Department of Agriculture late last month, 45 agricultural organizations, including the National Chicken Council and the American Meat Institute, asked the newly sworn-in agriculture secretary, Ed Schafer, to allow farmers to be released from long-term contracts that idle lands to preserve wildlife habitats under an effort called the Conservation Reserve Program. Meanwhile, the baking industry's lobbying group, representing giants like Sara Lee, Kellogg Co. and Interstate Bakeries Corp., plans to gather food-company employees as well as smaller bakers for a march on Washington next month to lobby for reduced wheat exports and to loosen the conservation program. Robb Mackie, president of the Washington-based American Bakers Association, is calling on government officials and Congress to respond to the high prices, which he says are "raising serious domestic food security issues." Over the past year, corn and soybean prices have hit a series of records. Now, wheat prices are on a tear. On the Minneapolis Grain Exchange, hard red spring wheat -- the high-protein variety used to make high-quality bread and pizza crust, among other foods -- closed at $17.63 cents a bushel yesterday, up from $4.92 a year earlier. In the cash markets, some farmers are fetching more than $20 a bushel. Many farmers are sitting on their grain waiting for the price to go even higher. That hoarding behavior is exacerbating the jump in prices. Increases in wheat prices have been so swift and steep that bakers can't adjust their own prices fast enough to offset the impact, said Len Amoroso, executive vice president of Amoroso's Baking Co. in Philadelphia. "We are talking about prices that are just unheard of," Mr. Amoroso said. On Tuesday, Mr. Amoroso said, he was quoted a price of $48 per 100 pounds of flour made with hard red spring wheat, which Amoroso's uses to make sandwich rolls and other bread products. A year ago, he paid about $14.60. Driving the high prices is scarcity in world markets following poor growing seasons in key wheat-producing nations like Australia and Ukraine . Global wheat stocks are at their lowest level in 30 years, while U.S. wheat stocks are the lowest they have been in 60 years, according to the USDA. Right now, hard red spring wheat is the scarcest of all. That is creating a dilemma for bakers. Mr. Mackie and other bakers are asking the U.S. Agriculture Department to curtail wheat exports until there is a guaranteed supply at home, especially since other countries -- including Russia , China and Egypt -- are keeping grain to themselves, fearing their own domestic food-security issues. At the same time, the U.S. is keeping its export hatch wide open. U.S. wheat exports from July to December of last year were up 74% over the previous year and they are expected to run strong in the coming months, according to the USDA. Restrictions on exports are unlikely to succeed due to expected opposition from farm groups and U.S. trading partners. Such a move would be a throwback to 1980, when President Carter imposed an embargo on U.S. grain shipments to the former Soviet Union . One of the first things that Ronald Reagan did upon taking office was lift the embargo. "That's not an option," said Mark Keenum, undersecretary of farm and foreign agricultural services at the USDA says about export controls. "We're in the business of promoting agricultural exports, not impeding" them. However, easing the conservation program has some support from growers. Some of that land in the Conservation Reserve Program, originally established in 1985 as a way to stabilize land prices and control excessive production by farmers but now is mostly concerned with conservation, would be perfect for planting food grains, Mr. Mackie says. So far the USDA -- under heavy pressure from conservation groups like Ducks Unlimited and Pheasants Forever -- has said that the market will do its job and that farmers who want to be released from their contracts will have to pay a hefty penalty. "We are not ruling anything out entirely, but at this time there are no intentions of allowing early-out of the CRP program," Mr. Keenum says. "We don't feel like the market situation or the price situation warrants that at this time." Brian Leier, a 35-year-old grain farmer in Linton , N.D. , said he would support a move to free up more land that has been idled for conservation. "It's either we release some CRP acres or there are going to be plenty of people starving around the world, I believe," Mr. Leier says. (END) Dow Jones Newswires: February 13, 2008 19:44 ET (00:44 GMT) Copyright (c) 2008 Dow Jones & Company, Inc. - - 07 44 PM EST 02-13-08 LaSalle Group Rosenthal Collins 190 South LaSalle Suite 3000 Chicago, IL 60603 Fax 312 676 1060 312 676 1077 Cell 630 730 6436

 

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